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Pace of market growth takes mortgage lenders and brokers by surprise – but hopes emerge of a fuller sustainable recovery

Intermediary lenders and brokers see no cause for intervention to limit growth

Number of brokers struggling to help prime and near-prime borrowers halves in the last year

Wider causes of application failure show prudent approach by lenders

Broker-lender relationships improve as market returns to growth

Almost one in three brokers expect more than 10% growth in first-time buyer volumes

Market growth in the second half of 2013 surprised a majority of intermediary mortgage lenders and brokers but stops short of needing government intervention, according to the latest Intermediary Lending Outlook from IMLA (the Intermediary Mortgage Lenders Association).

Almost nine in ten (86%) lenders and 60% of brokers agree that growth was faster than expected between July and December. However, most lenders (71%) and brokers (74%) feel this upward trend will not require the government to intervene during 2014 to cool the pace of growth. A further 21% of lenders and 11% of brokers are unsure.

Instead, 69% of brokers see current growth as just the beginning of a fuller recovery while another 12% feel this could be on the cards. Lenders are slightly more cautious: 43% expect a fuller recovery while 50% feel this may occur.

Confidence reflected in growing ability to source mortgages for clients

Confidence has been transformed among mortgage brokers in the last year: 90% feel market conditions are currently improving, compared with just 37% in January 2013. Just 2% saw improvements as significant twelve months ago, yet 36% now take this view.

Lenders remain unanimous that the market is improving, as was the case in July. A growing number (67%) see current improvements as ‘significant’ (compared with 63% – Jul 2013).

This confidence is reflected in brokers’ ability to source mortgages for their clients. Just 26% were unable to source a mortgage for a prime borrower in Q4 2013, with more than twice as many (63%) having experienced this problem in Q4 2012. The same is true for near-prime borrowers: 37% of brokers failed to source a mortgage for this type of client in Q4 2013 compared with 67% in Q4 2012.

Growing numbers report improving market conditions

Jan 14

Jul 13

Jan 13

Jul 12

Jan 12

Brokers

Feel market conditions are improving

90%

85%

37%

14%

27%

Feel conditions are improving significantly*

36%

20%

2%

–

–

Unable to help a prime borrower in the last quarter

26%

37%

63%

64%

54%

Unable to help a near-prime borrower in the last quarter

37%

46%

67%

69%

65%

Lenders

Feel market conditions are improving

100%

100%

–

–

–

Feel market conditions are improving significantly*

67%

63%

–

–

–

*The % who feel improvements are significant are counted in the overall % who feel conditions are improving

Prudent lenders keep borrowers in check

Almost nine in ten brokers (88%) report that successful applications stayed the same or improved in the second half of 2013. But despite wider availability of mortgages and greater volumes of lending, more brokers are experiencing application failure as activity levels grow.

Faced with growing consumer interest, the trend suggests lenders are keeping a close eye on affordability as applications rise¹ and staying focused on lending responsibly to those who can afford it. Growth of lending in the high loan to value (LTV) bracket means limited deposits are now the fourth most common cause of failure, having been third in July, while existing debt has risen to third.

More than one in four lenders (29%) increased the number of brokers they worked with in the second half of 2013, with just 7% reducing numbers. More lenders reported a consistent quality of introduced business in the previous six months (79% – Jan 2014 vs. 64% – Jul 2013) – although those experiencing better quality fell from 29% to 21%.

For their part, a growing number of brokers reported consistent service from lenders over the last six months: up from 45% in July 2013 to 50% in January 2014. Those who feel lenders’ service improved also crept up slightly from 11% to 12%.

Better systems for applications and more information on target profiles remain broker’s proprieties for lenders to address. Demand for better systems has grown from 25% to 34% of brokers, with interest in more information on target profiles also rising from 23% to 27%.

First-time buyers will drive growth in 2014

Brokers see the first time buyer market as the biggest growth area during 2014, with 30% expecting business volumes to increase by more than 10%. One in five (20%) expect the same growth among home movers while 18% anticipate more than 10% extra business in buy to let and remortgages.

Growth is expected to be fuelled by standard borrowers: 79% of brokers predict this part of the market will grow in 2014 (including 29% expecting more than 10% extra business). In contrast, 52% of brokers expect the near-prime market will grow but just 7% forecast growth in this segment to be above 10%.

Peter Williams, Executive Director of IMLA, comments:

“It is easy to forget just how low expectations were this time last year, with barely a third of brokers sensing an improvement in the mortgage market and a tiny minority placing any significance on it. A host of factors have contributed to a remarkable turnaround, including better funding markets, government support, consumer confidence and the improving economy.

“A market slump breeds pessimism, which has certainly been the case in the mortgage market since 2007/8, so for growth to return sooner than expected is nothing unusual and no cause for alarm. It is absolutely right for the Treasury, Bank of England and regulators to maintain a watching brief in 2014. But the recovery is yet to bed in fully and issues such as future interest rates continue to prompt widespread debate. Unnecessary tinkering may undermine the long term goal of laying the foundations for a sustainable market that is strong enough to be self-sufficient.

“Improving relations between lenders and brokers are a big plus as new regulations bring about new working relationships from April. Preparations are well underway to keep on serving the growing number of people interested in getting a mortgage. Their chances of doing so are vastly improved compared with this time last year – but lenders are clearly focusing on affordability and are making sure those who get mortgages should be able to sustain repayments through the upturn in interest rates.”

The Intermediary Mortgage Lenders Association (IMLA) has announced the full re-election of its current board of directors to serve in 2014. The vote of confidence concludes a year of growth for the trade association, which represents the interests and views of lenders in the intermediary mortgage market.

David Finlay, Barclays managing director of intermediaries, will serve a second year as the first IMLA chairman from a mainstream retail bank. Charles Haresnape, Aldermore managing director of residential mortgages, retains the role of deputy chair.

John Heron, managing director of Paragon Mortgages, Richard Tugwell, director of intermediary sales at Virgin Money, and Kevin Purvey, head of intermediary sales at Coventry Building Society will also continue their roles as IMLA directors following a unanimous vote.

The election result means IMLA will continue to be led by a diverse mix of lenders in 2014, bringing together the mainstream retail banking sector, emerging ‘challenger’ brands, the building society sector and specialist lenders. IMLA has also added six associate members during 2013 to the twenty lenders within its ranks.

Members’ vote for continuity reflects the momentum IMLA has built in 2013, fuelled by the publication of its report, Rebalancing the housing and mortgage market – critical issues, and its hosting of the inaugural Great Mortgage Debate in Westminster. IMLA has been vocal in calling for a long term government strategy for the mortgage market to replace short-term interventions like the Funding for Lending Scheme (FLS) and Help to Buy, along with greater effort to address the balance between housing supply and demand.

David Finlay, Chairman of IMLA commented:

“I speak for each of the re-elected board by thanking IMLA members for their contributions this year and for offering the chance to continue championing the cause of intermediary lending into 2014. This vote represents a resounding show of confidence in IMLA’s current direction and the vital role it has to play in address the key issues that are emerging as the market resumes its growth.

“The return of consumer confidence promises to be an important legacy of 2013, but there is still a pressing need a longer term strategy. The market has changed dramatically in the last twelve months, but there is a long way to go to restore full health. Pressing decisions need to be made to protect the future balance of funding, regulation, house building and lending activity.

Peter Williams, Executive Director of IMLA, continued:

“A continuing focus on quality and professionalism will put the intermediary channel in pole position to support the upward trajectory of the market. With the Mortgage Market Review implementation and other challenges ahead, IMLA will continue to draw on the expert views of its diverse membership, which includes some of the most experienced figures in our industry.

“Working alongside our fellow trade bodies, we are committed to regular dialogue with government and regulators – both in the UK and in Europe – to ensure the path that emerges for both mortgage and housing markets steers us towards long term sustainability.”

Intermediary mortgage lenders are confident that new affordability checks resulting from the Mortgage Market Review (MMR) will not significantly reduce the number of people who successfully apply for a mortgage.

Research by IMLA (the Intermediary Mortgage Lenders Association) found just 7% of intermediary lenders expect significantly more people will be turned down for a mortgage because of new stress tests, which will examine whether borrowers could afford their repayments in the event of interest rates rising.

IMLA’s Intermediary Lending Outlook shows that almost three quarters of lenders are confident that affordability checks will not impact borrowers in large numbers (73%), while the remaining 20% are unsure.

Overall responsibility for affordability checks will officially pass from brokers to lenders when the MMR takes effect in April 2014. While many of its provisions are already standard practice for lenders, mortgage brokers are less convinced that aspiring borrowers will be unaffected.

Although over a third of brokers do not expect stress tests will significantly reduce the number of successful mortgage applicants (34%), close to half predict that considerably more consumers will find they are turned down (44%).

However, brokers are significantly more confident about the impact of the MMR than they were at the start of the year. Two thirds (66%) are not at all worried in August 2013, compared with 42% in January 2013, and the percentage with significant worries has dropped from 12% to 4%.

In contrast, 67% of lenders are currently worried about the impact of MMR – but despite their extra responsibilities under the new rules, no lender has serious concerns.

Peter Williams, Executive Director of IMLA, comments:

“The MMR rules on affordability are built on common sense and are not too far removed from how many lenders already approach the issue. Recent experience has shown how important it is to ensure that mortgage borrowers can reasonably manage their commitments, not just now but in the future.

“We are in unfamiliar territory when it comes to current interest rates, so we have to be pragmatic and anticipate the likelihood of change. Falling numbers of arrears and repossessions in recent years show a responsible approach to mortgage approvals, and lenders are working hard to ensure their existing tests meet the full MMR requirements without unfairly disadvantaging consumers.

“Although the regulatory buck will rest with lenders from April 2014 there is still a collective responsibility to put affordability at the heart of the industry. This involves brokers working closely with lenders to help finalise the rules of engagement, while also ensuring that customer expectations are managed and applications suitably vetted.”

Mortgage brokers and intermediary lenders are united in their concern that inflated house prices are the gravest threat to the success of the Help to Buy scheme, according to the Intermediary Mortgage Lenders Association (IMLA).

IMLA’s Intermediary Lending Outlook shows almost two thirds of intermediary lenders and brokers (60% and 59% respectively) single out a house price bubble as the most likely factor that may undermine the government scheme.

Scheme could spark a minimum 11% house price rise

The research shows lenders already anticipate a 2.7% increase in the average house price by the end of the year, pushing it to £166,418 according to the Land Registry measure*. Lenders’ prediction is based on the market’s performance in the first half of 2013 and the initial impact of the Help to Buy equity loan scheme.

If this same growth rate continues for the duration of Help to Buy, the average house price will reach £180,265 by the end of 2016: an overall rise of 11% in four years.

This would bring house prices close to their last peak of £181,975, which was recorded in November 2007. There are concerns that the rate of increase could be even greater with the upcoming Help to Buy mortgage guarantee offer still to launch in January 2014.

Lender support is crucial success factor

Brokers also register significant concerns about a potential lack of lender support for Help to Buy, with almost half worried this will jeopardise the scheme (49%).

Just one in five intermediary lenders openly share this sentiment (20%) yet almost half see capital weighting requirements as a major barrier to success (47%). The detail of capital relief is still to be confirmed by the Treasury and will greatly influence lenders’ ability to back the initiative.

The same proportion of the lending community is concerned that an over-reliance on government funding will handicap Help to Buy (47%), while more than a quarter cite structural weaknesses in the mortgage market (27%). This market imbalance is of as much concern as a change of government in the next general election (27%).

What are the biggest threats to the success of Help to Buy?

Lenders

Brokers

1. Artificially inflated house prices

60%

1. Artificially inflated house prices

59%

2. An over-reliance of government funding

47%

2. A lack of lender support

49%

3. Restrictions on lenders’ capital ratios

47%

3. An over-reliance of government funding

38%

4. Structural weaknesses in the market

27%

4. Restrictions on lenders’ capital ratios

20%

5. A change of government

27%

5. A downturn in the wider economy

19%

6. Unattractive pricing for lenders

27%

6. Structural weaknesses in the market

18%

7. A lack of lender support

20%

7. A change of government

17%

8. A downturn in the wider economy

20%

8. Unattractive pricing for lenders

15%

IMLA Intermediary Lending Outlook, August 2013

First time buyers set to benefit:

Despite these concerns both groups agree that first time buyers will see the greatest benefit from the upcoming Help to Buy mortgage guarantee: 100% of lenders and 89% of brokers took this view.

Lenders are more optimistic than brokers about home movers benefitting (80% vs. 56%). While the guarantees will also be available to existing homeowners seeking to move to another lender, just 13% of lenders and 6% of brokers see the scheme as benefitting homeowners remortgaging their properties.

Peter Williams, executive director of IMLA, commented:

“Pleasing though it is to see increasing levels of activity in the market and a swell of consumer interest, these findings spell out the importance of keeping control over any future growth.

“There is a clear consensus that first-time buyers stand to benefit most from the second part of Help to Buy. But if house prices continue to rise for the duration of the scheme, then in essence we will be giving with one hand and taking away with the other. Moreover the exit from the scheme will need to be managed very carefully so it without causing serious harm to the market.

“If people are struggling to raise deposits in the current climate then a further 11% increase in house prices will lift the property ladder even further out of reach for some. House builders are attempting to bridge the ever growing chasm between supply and demand* which is going to be essential to ensure we help more people to access the property ladder without creating new hurdles in the form of inflated house prices.

“In the meantime, the pressure is on to ensure Help to Buy is more inclusive than divisive. Agreement on capital weightings and on the fee lenders will be charged to participate are crucial to ensuring the scheme is made affordable for lenders as well as consumers if we want to see a similar impact as the current equity loan scheme.”

Target profiles and credit history the key barriers to securing a mortgage

More than 1m residential transactions expected for 2013

The mortgage market’s resurgence has prompted 50% of intermediary lenders to increase the number of brokers they work with during 2013, according to the Intermediary Lending Outlook from IMLA (the Intermediary Mortgage Lenders Association).

Despite growing workloads as volumes of applications and lending increase, nearly three in ten lenders (29%) report an improvement in the quality of introduced business during the first six months of the year. A further 65% say business quality has remained stable .

More than a third of brokers (34%) have seen successful applications grow between January and June, while twice as many identify an improvement in product availability (69%).

Structural change in the intermediary market

Directly authorised (DA) and appointed representative (AR) brokers held an almost equal share of intermediated business in the first half of the year, with AR market share marginally higher at 51% vs. 49% according to IMLA members.

Although the majority of lenders (57%) predict this balance will remain the same, more than one in three (36%) expect more emphasis on ARs in the second half of the year, impacted by structural changes in the intermediary market and the anticipated trend for more DAs to become ARs.

Lenders identify two key factors in deciding to work with a particular broker: the credit quality of the business they introduce, and the quality of their loan application information.

More than half of brokers (56%) report that lenders’ service to them has been consistent or improved since January 2013. Brokers’ priorities for lenders to address include providing better systems for applications (25%), more information about target profiles (23%) and a greater range of products (15%). Flexible underwriting and an end to dual pricing also appear on brokers’ wish-list.

Lender profiles define application success

Fitting a lender’s profile is the biggest challenge for mortgage applicants to overcome: more than two thirds of brokers pinpoint this among the key reasons for application rejections (67%). Over half of brokers point the finger at financial difficulties such as county court judgements (CCJs), arrears or bankruptcy (52%), while limited deposits (41%) and the level of existing debt (36%) also impact success rates.

Nevertheless mortgage availability has clearly improved in the last six months. In the last quarter of 2012, 63% of brokers were unable to source a mortgage for a mainstream borrower, while 67% had the same problem for a near-prime borrower. These figures have fallen dramatically to 37% and 46% respectively in the second quarter of 2013.

Market predicted to exceed 1m residential transactions

Market growth has prompted both intermediary lenders and brokers to revise their predictions for total gross lending in 2013. Having forecast £150bn in January 2013, lenders have raised their expectations by 5% to £157bn.

Brokers remain more conservative, but a busy six months has had an even bigger impact on their annual forecast: up by 12% from £139bn to £155bn in July 2013.

Mortgage market 2013 forecasts

Intermediary lenders

Brokers

Jan ’13

Jul ’13

Jan ’13

Jul ’13

Total gross mortgage lending

£150bn

£157bn

£139bn

£155bn

Total net mortgage lending

£9.3bn

£12.6bn

–

–

Total residential transactions

0.94m

1.01m

–

–

More than four in five brokers (85%) feel the market is currently improving, compared with 37% in January. One in five report a ‘significant’ improvement (20%) – ten times more than January (2%).

Lenders are unanimous in their view that market conditions are currently improving, with almost two thirds reporting a ‘significant’ upturn (63%). Having forecast 940,000 total residential transactions and £9.3bn net lending for the year back in January, both predictions have been revised upwards to 1.01m and £12.6bn respectively.

They are similarly optimistic about intermediaries taking some three fifths (59%) of total mortgage business in 2013. Intermediaries’ 2012 market share in terms of business volume amounted to 55% of first time buyer loans (vs. 53% value), 44% of home mover loans (vs. 46% value) and 45% of remortgage loans (vs. 48% value).*

Lenders expect next time buyers to account for 28% of total gross mortgage lending in 2013 followed by remortgages (26%), first-time buyers (19%) and buy-to-let (17%). But according to brokers, remortgages made up the largest share of mortgage cases introduced in Q2 2013 (28%) followed by next-time buyers (25%), buy-to-let (22%) and first-time buyers (20%).

Brokers anticipate business volumes will increase by around 3% for each category in the second half of the year, with first-time buyers experiencing the biggest rise (3.5%).

Peter Williams, Executive Director of IMLA, comments:

“It is encouraging to see evidence of greater cohesion in the face of a more active market, with brokers successfully matching mortgage applicants to lenders’ requirements. IMLA believes a customer who receives advice is much better served than one who does not, and these results should instil further confidence that the market is ready for continued growth.

“Both lenders and brokers have high hopes that business will continue to grow for the remainder of the year. A key challenge will be to manage that growth while also preparing to implement the Mortgage Market Review (MMR) from April 2014? Any upsurge of activity when the Help to Buy mortgage guarantee arrives in January 2014 will put even more emphasis on broker-lender relationships, so close cooperation will be essential to make these endeavours a success.

“The quality of advice and service are absolutely essential to the consumer experience and IMLA is working hard to uphold good practice among brokers. Together with other industry representatives, we are exploring the case for a framework for an adviser registration scheme to provide a single, authoritative source of information on the entire broker community. As well as helping lenders, brokers and regulators to work together more efficiently, it will give even greater consumer protections which can only be a good thing as business volumes continue to increase.”

Target profiles and credit history the key barriers to securing a mortgage

More than 1m residential transactions expected for 2013

The mortgage market’s resurgence has prompted 50% of intermediary lenders to increase the number of brokers they work with during 2013, according to the Intermediary Lending Outlook from IMLA (the Intermediary Mortgage Lenders Association).

Despite growing workloads as volumes of applications and lending increase, nearly three in ten lenders (29%) report an improvement in the quality of introduced business during the first six months of the year. A further 65% say business quality has remained stable .

More than a third of brokers (34%) have seen successful applications grow between January and June, while twice as many identify an improvement in product availability (69%).

Structural change in the intermediary market

Directly authorised (DA) and appointed representative (AR) brokers held an almost equal share of intermediated business in the first half of the year, with AR market share marginally higher at 51% vs. 49% according to IMLA members.

Although the majority of lenders (57%) predict this balance will remain the same, more than one in three (36%) expect more emphasis on ARs in the second half of the year, impacted by structural changes in the intermediary market and the anticipated trend for more DAs to become ARs.

Lenders identify two key factors in deciding to work with a particular broker: the credit quality of the business they introduce, and the quality of their loan application information.

More than half of brokers (56%) report that lenders’ service to them has been consistent or improved since January 2013. Brokers’ priorities for lenders to address include providing better systems for applications (25%), more information about target profiles (23%) and a greater range of products (15%). Flexible underwriting and an end to dual pricing also appear on brokers’ wish-list.

Lender profiles define application success

Fitting a lender’s profile is the biggest challenge for mortgage applicants to overcome: more than two thirds of brokers pinpoint this among the key reasons for application rejections (67%). Over half of brokers point the finger at financial difficulties such as county court judgements (CCJs), arrears or bankruptcy (52%), while limited deposits (41%) and the level of existing debt (36%) also impact success rates.

Nevertheless mortgage availability has clearly improved in the last six months. In the last quarter of 2012, 63% of brokers were unable to source a mortgage for a mainstream borrower, while 67% had the same problem for a near-prime borrower. These figures have fallen dramatically to 37% and 46% respectively in the second quarter of 2013.

Market predicted to exceed 1m residential transactions

Market growth has prompted both intermediary lenders and brokers to revise their predictions for total gross lending in 2013. Having forecast £150bn in January 2013, lenders have raised their expectations by 5% to £157bn.

Brokers remain more conservative, but a busy six months has had an even bigger impact on their annual forecast: up by 12% from £139bn to £155bn in July 2013.

Mortgage market 2013 forecasts

Intermediary lenders

Brokers

Jan ’13

Jul ’13

Jan ’13

Jul ’13

Total gross mortgage lending

£150bn

£157bn

£139bn

£155bn

Total net mortgage lending

£9.3bn

£12.6bn

–

–

Total residential transactions

0.94m

1.01m

–

–

More than four in five brokers (85%) feel the market is currently improving, compared with 37% in January. One in five report a ‘significant’ improvement (20%) – ten times more than January (2%).

Lenders are unanimous in their view that market conditions are currently improving, with almost two thirds reporting a ‘significant’ upturn (63%). Having forecast 940,000 total residential transactions and £9.3bn net lending for the year back in January, both predictions have been revised upwards to 1.01m and £12.6bn respectively.

They are similarly optimistic about intermediaries taking some three fifths (59%) of total mortgage business in 2013. Intermediaries’ 2012 market share in terms of business volume amounted to 55% of first time buyer loans (vs. 53% value), 44% of home mover loans (vs. 46% value) and 45% of remortgage loans (vs. 48% value).*

Lenders expect next time buyers to account for 28% of total gross mortgage lending in 2013 followed by remortgages (26%), first-time buyers (19%) and buy-to-let (17%). But according to brokers, remortgages made up the largest share of mortgage cases introduced in Q2 2013 (28%) followed by next-time buyers (25%), buy-to-let (22%) and first-time buyers (20%).

Brokers anticipate business volumes will increase by around 3% for each category in the second half of the year, with first-time buyers experiencing the biggest rise (3.5%).

Peter Williams, Executive Director of IMLA, comments:

“It is encouraging to see evidence of greater cohesion in the face of a more active market, with brokers successfully matching mortgage applicants to lenders’ requirements. IMLA believes a customer who receives advice is much better served than one who does not, and these results should instil further confidence that the market is ready for continued growth.

“Both lenders and brokers have high hopes that business will continue to grow for the remainder of the year. A key challenge will be to manage that growth while also preparing to implement the Mortgage Market Review (MMR) from April 2014? Any upsurge of activity when the Help to Buy mortgage guarantee arrives in January 2014 will put even more emphasis on broker-lender relationships, so close cooperation will be essential to make these endeavours a success.

“The quality of advice and service are absolutely essential to the consumer experience and IMLA is working hard to uphold good practice among brokers. Together with other industry representatives, we are exploring the case for a framework for an adviser registration scheme to provide a single, authoritative source of information on the entire broker community. As well as helping lenders, brokers and regulators to work together more efficiently, it will give even greater consumer protections which can only be a good thing as business volumes continue to increase.”

The Funding for Lending Scheme (FLS) has failed to live up to expectations for over a quarter of mortgage brokers, according to research by the Intermediary Mortgage Lenders Association (IMLA).

On the first anniversary of the Bank of England launching the lending incentive scheme, 27% of brokers feel its performance in the mortgage market has fallen short of its billing while just 16% of brokers have had their expectations exceeded.

The scheme arrived in August 2012 with the Bank stating it would “incentivise banks and building societies to boost their lending to UK households and non-financial companies”. Yet while two-thirds of brokers feel that product pricing has improved (67%) 12 months later, barely half agree that product choice has grown (53%).

Fewer than half say the market is more accessible as a result of the FLS (40%) – despite 48% reporting a rise in consumer interest prompted by the scheme.

Mainstream borrowers have visibly benefitted more than near-prime borrowers from improving conditions. Just 35% of brokers were unable to source a mortgage for the former in the second quarter of 2013, 15 percentage points lower than the 52% reported in Q2 2012.

In contrast 46% of brokers failed to source a mortgage for near-prime borrowers in Q2 2013, just nine percentage points better than the equivalent time last year (55%).

Borrowers’ contrasting fortunes under the FLS

Q2 2012

Q2 2013

Brokers unable to source a mortgage for a mainstream borrower

52%

35%

Brokers unable to source a mortgage for a near-prime borrower

55%

46%

Peter Williams, Executive Director of IMLA, comments:

“Even allowing for the spread of brokers’ experiences, these results suggest the FLS has not stimulated the market as much as some people had originally hoped. The survey offers a real market level insight into the outcomes being achieved. By setting out with the broad aim of increasing lending, the scheme has had limited effects on widening access to the market and left a significant policy hole which the Government is seeking to tackle by committing greater funding through Help to Buy.

“It is likely that FLS-related lending figures will improve as the year progresses, but we are still well short of previous peaks – so it is little wonder that the first twelve months of the scheme have seen a muted response from brokers. With Help to Buy underway, the new mortgage guarantee scheme due to start in January 2014 and the FLS refocused and extended to January 2015, we could see momentum building into 2014.

“However we now have a series of overlapping measures in place which suggests a lack of long-term vision and planning. All are time limited and increases in housing supply have been slow to materialise. The threats posed by possible house price inflation because of stimulus measures, alongside upwards adjustment of interest rates in the medium term, are considerable.

“Unveiling one high-profile plan after another may be electorally attractive, but doubts must remain as to whether we can avoid the situation where just a third of young households could be owner-occupiers by 2020 – just half the number seen in 1993. It is vital that government, regulators and lenders work to channel our collective efforts towards a balanced housing and mortgage market.”